SEC seeking warrant exemption for private email access

The US Securities and Exchange Commission (SEC) has become the latest federal government agency to push for greater access to private email data. An agency proposal next week is expected to request warrantless powers.

Financial regulators with the SEC are now set to propose
legislation that will grant the agency access to electronic
communications without the need for a warrant, according to a
report by The Daily Caller. The agency is the regulatory body
which, among other things, oversees stock and options exchanges.

According to a source familiar with an ongoing discussion between
legislators and the SEC, the new surveillance powers would come
in the form of an amendment to the Electronic Communications
Privacy Act of 1986 (ECPA), granting the agency an exception for
civil warrants during civil investigations.

The Senate is currently debating new legislation which would
specifically require federal agencies to obtain warrants before
searching through private emails. A loophole currently allows
federal investigators access to emails without a warrant as soon
as they are 180 days old, or have been opened and are still being
held by an email server.

Groups such as the Electronic Frontier Foundation (EFF) and the
American Civil Liberties Union (ACLU) have for years been pushing
for modernization of the 1986 legislation, arguing in large part
that technology has simply outpaced the spirit of the law, and
left behind unreasonable expectations of privacy.

The ACLU recently made headlines after obtaining and publishing
internal documents which alleged that the criminal investigation
division of the Internal Revenue Service (IRS) and the FBI were
interpreting laws under the ECPA to essentially circumvent
warrant requirements.

Though the SEC has itself declined to comment on the allegations,
Republican Senator Chuck Grassley’s office did confirm on Friday
that the matter was under discussion.

“Staff discussions are ongoing
about language to preserve the SEC’s ability to enforce the law
in limited situations and protect investors and the public from
fraud, but nothing has been finalized,” said spokesperson
Beth Levine.

"In addition, Senator Grassley
has authorized a hotline to determine if there are other concerns
from members that need to be addressed,” she added.

As the government’s financial regulatory body, the SEC is
ostensibly looking for greater powers - or at the very least
hoping to maintain its current access in order to collect
evidence as it pursues civil investigations into possible fraud.
For example, this week saw a high profile indictment filing
against one of the country’s largest hedge funds, the $10 billion
SAC Capital Advisors, on charges of widespread insider trading.

Greater access to email information could allow the SEC to more
aggressively pursue a civil case against SAC chief Steven Cohen,
or any other executive suspected of breaching the law.

In an April letter to Congress, SEC Chairman Mary Jo White argued
that amendments to the ECPA could have “a significant negative impact” on
enforcement efforts.

The SEC has “often”
asked internet service providers for e-mails “because persons who violate the law
frequently do not retain copies of incriminating
communications,” White said in her letter to Vermont
Senator Patrick Leahy, chairman of the Judiciary Committee and a
sponsor of a bill that would enact warrant requirements over
electronic information gathering.

The SEC does not currently have the authority to obtain any
warrants, although it can coordinate with law enforcement to
collect needed evidence. The agency can issue administrative
subpoenas, although SEC probes are often conducted stealthily, so
as not to tip off the target of their investigations.

Steve Crimmins, a former SEC trial attorney who spoke to
Bloomberg this week, agreed that warrant requirements would blunt
the agency’s probes.

“In dealing with large
corporations which have responsibly maintained email
communications, the SEC will be able to get all the email it
needs,” Crimmins said. “But in cases with less responsible
entities or investigations just involving individuals, the SEC
will be severely hampered in getting the evidence it needs to
bring a case.”

Still, efforts by the SEC to exempt itself from warrants are
likely to be seen with a great amount of skepticism by privacy
advocates like the EFF and the ACLU, which are already concerned
over present access to private communications by federal
investigators.